U.S. soybean futures are expected to fall Monday, driven lower by traders continuing to shed risk on the uncertainty over global economic growth and fears of slower commodity imports to Japan.
In overnight trading, Chicago Board of Trade May soybean future, the most active contract was down 13 3/4 cents at $13.20 3/4. New crop November futures were down 17 cents at $12.83. Analysts expect soybeans to open 15-17 cents lower.
In the aftermath of Friday's earthquake and subsequent tsunami in Japan, investor confidence in global economic growth has been shaken.
"Investors are liquidating positions in riskier assets such as grain and energy markets, and with Japan ports closed to deliveries, traders are heading to the sidelines until things cool off," said Dax Wedemeyer, analyst with Iowa based brokerage U.S. Commodities.
Twenty percent of Japan's feed grain production currently warehoused for later use could have been destroyed by earthquake and subsequent tsunami in Japan, analysts at Commerzbank say. "Now that port facilities and other infrastructure in Japan have been destroyed, it will be difficult to unload and transport imports in the foreseeable future," firm writes.
Investors are also cautious of risk exposure amid political unrest in the Middle East and North Africa, and favor exiting some riskier positions in the absence of fresh supportive news.
Meanwhile, further weakness is anticipated from prospects for larger South American production and increasing harvest pressure in Brazil.
Brazil and Argentina are the world's second- and third-largest producers of soybeans, respectively, behind the U.S. and are counted on to relieve the strain on tight U.S. supplies.
A lower-than expected crush rate for February, reported in Monday's National Oilseed Processors Association report, added to concerns in soybeans, Wedemeyer said.
NOPA pegged Feb crush rates at 124.9 million bushels, down from January's 144.6 million, and below the average of estimates from a Dow Jones Newswires survey of 131.8 million bushels.
However, if prices can hold above Friday's lows, the market may find some support from end user buying, as stocks are tight and soybeans remain in a battle for 2011 planted acres with corn and cotton in the U.S. Delta.
Insufficient increases in acreage will require higher-than normal crop yields come summer, if another year of tight supply is to be avoided.
On tap for Monday, USDA is scheduled to release its weekly export inspections report at 11 a.m. EDT.